Nitesh Singh | Managing Director | Communications, Media and Technology | Accenture Africa | mail me |
A new generation of digital technologies has arrived and is transforming business as we know it across South Africa. 5G networks and converging technologies – including artificial intelligence (AI), Cloud, Edge, and the Internet of Things (IoT) – are set to fundamentally change how enterprises operate, unleashing innovation and market opportunities like never seen before.
To realize the full benefits of advances in network connectivity and digital technologies, companies will have to invest in a suite of new convergent technology solutions and change culturally. They must embrace and elevate the next-generation connectivity and technology agenda as a business priority on the C-suite radar.
Winning companies will develop the internal skills needed to put these innovative solutions at the base of company growth. This will not be easy, and companies may have concerns over the complexity of associated technology integration, extracting return on investment, and choosing the appropriate partner ecosystem and platform for driving solutions.
Sub-Saharan Africa provides fertile ground for innovation and more key telecommunication adoption. In the region, 8% of GDP comes from mobile technologies and mobile services, bringing about $130billion of economic value add. By the end of 2020, 495million people were subscribed to services in sub-Saharan Africa, representing 46% of the region. Subscribers grew to beyond 500million in early 2021. However, internet uptake growth is not growing as fast as we thought we would, and the penetration rate of 46.2% is low compared to other parts of the globe.
These numbers show lots of room for the industry to grow its penetration rates still. We need to rethink how to harness this growth potential to benefit our continent.
Which telecommunication trends can benefit Africa?
- Globally, e-commerce has grown exponentially and accounted for 27% of retail sales in April 2020.
This is a year-on-year growth of 16% from 2019. African companies can harness this trend with the introduction of super apps.
A good example is one of the leading mobile communications companies in South Africa, which has already taken the lead in this regard. Customer uptake increased. 85% of consumers that were using a digital channel for the first time during COVID-19 were interested in using digital channels again post-crisis, which hold great opportunity for the industry.
The shift to digital has had a profound change in how people interact. 89% of consumers indicated that digital interactions were equal or better than previous in-person experiences. It is also pertinent that 60% of consumers felt no or a slight sense of loss if traditional stores did not return in their earlier format. This calls for a fundamentally different way of interacting with consumers going forward.
- Telecommunications companies need to move from being a Telco to being a Techco.
Digital native integration is now the order of the day. In Fintech, we have seen a strong call for value-added services such as mobile financial services, and these have the potential to drive strong revenue growth.
The shift had become more pronounced since 2020 when mobile money transactions boomed in sub-Saharan Africa to account for 43% of all new accounts and globally now grossing nearly $500million during the pandemic. Fintech will be part of the new Telco’s going forward.
- 5G will offer untold opportunities.
5G will open the gateway to new markets, while the network becomes an extension of the Cloud, and Edge becomes the unique control point.
Technology, ecosystems and operating models will change the CSP landscape as 5G creates a $700billion opportunity in 2030, with monetizing led by industry and not by consumers.
- By 2023 over 50% of the new IT structure will be deployed on the Edge, and by 2024 the prediction is that Edge apps will increase by 800%, creating an Edge computing market worth about $250.6billion.
The future workforce will require skills and opportunities to capitalize on this great potential. Telcos will need to invest in engineering and analytics industries to capitalize on the growth.
- Cloud migrations will unlock massive business value.
As CSPs migrate, the Telco network will become an extension of the Cloud. The last point is about cloud migrations and unlocking value. Opex and Capex savings will accelerate innovation and enable entirely new business models while lowering the barriers to entry.
What is the value play in all of this, and how does it connect?
- Connected Consumer Platform – digital services that integrate and support the consumer’s life, curated by the CSP-led ecosystem.
This means that consumers can get the content they want when they want it and where they want it. This calls for the Telcos to connect with their consumers.
- SMB Activator – tailored white label SMB services that are packaged and bundled for ease, simplicity and digital advances will be the order of the day.
There need to be more tailored white label solutions. SMB is going to be growing across the continent over the next few years. We see lots of partnerships happening in Telcos between SMBs. Such partnerships create niche packages that these SMBs will take to the market.
- X-industry Orchestrator – 5G is coming and acting as an orchestrator across the industry is vital while moving up in the U-IOT opportunity stack of apps, platforms and services.
IoT and augmented reality is already available but will play an even more significant role in the future. Telcos must start to invest and double down in thinking more strategically about what it all means for the consumers and the value they hold.
- Connectivity Optimizer – The Telcos must optimize cost and digitization to unlock capital to invest in growth and a new business foundation.
It is rethinking the operating model, rethinking the business structure and focussing on enabling growth. Connectivity optimization is looking at all the capital, the investments, the unbundling of the businesses and determining the best way going forward.
- Structural Separator – the industry is changing into two freestanding businesses: one that operates the network (NetCo) and one customer-facing entity (ServCo).
With these five value plays in mind, Telcos must understand how they will operate in this new changed world to capitalize on all the opportunities it holds. Overall, the future is a bright one for operators, and we at Accenture foresee a lot of opportunity for growth in the telecommunication arena.
